Executive Briefing March 16, 2018

TOP QUOTES

“I think some of the things that we will do over the next little while, if we do them correctly, will be as good as anything in the world. Part of my vision is, I want this to be lasting past me. This is a multiadministration approach. If we just do something for two or three years and then it all disappears when we do, that’s a really poor impact.”

– Chris Lidell, assistant to the president and director of the American Technology Council

“For a decade, tech was a great, great thing. It allowed people to agglomerate. It allowed people who had no power, who didn’t own a newspaper, who didn’t own a TV station, who didn’t have a megaphone, to get together and have power. Now because it’s so open and so free, lots of dark forces have taken advantage, and I certainly think tech has to modulate itself. One easy example for us in politics, all ads should have to be made public, who’s paying for the ads when they’re political ads, just like you have to do on television or radio, and I don’t know why big tech resists that.”

–Senator Chuck Schumer (D-NY)

CLOUD ACT

The Chertoff Group Now is the Time to Act on the Cloud

Former Secretary of Homeland Security Michael Chertoff published a blog in support of the CLOUD Act and pushes back against criticisms raised by civil liberties groups. In particular, Chertoff emphasizes that the bilateral agreements enabled by the CLOUD Act are an important tool in enshrining privacy protections and staving off data localization measures.

Politico Morning Tech: Wyden, Paul See Storm Clouds

Politico’s Morning Tech newsletter noted that Sens. Ron Wyden and Rand Paul sent a letter to Sens. Thad Cochran and Patrick Leahy urging them that the CLOUD Act not be included in the omnibus spending bill next week, and instead, suggest the CLOUD Act needs more time for review and possible amendments.

Law360 Rights Groups Say CLOUD Act Tramples Civil Liberties

Law360 reported that much of the split between the CLOUD Act’s supporters and detractors is over a clause allowing the U.S. to enter into bilateral data-sharing agreements with foreign nations. The article notes comments by Sen. Hatch spokesperson Matt Whitlock that the bill includes safeguarding requirements for countries entering into data-sharing agreements with the U.S. to protect citizens’ privacy and ensure oversight by Congress.

Politico Morning Tech: To the Cloud, By Way of Omnibus?

Politico’s Morning Tech newsletter noted that Sen. Orrin Hatch hopes to attach the CLOUD Act to the omnibus. The newsletter also highlights supportive comments for the bill’s passage by ITI senior vice president of government affairs Andy Halataei, as well as a tweet by Sen. Ron Wyden opposing the bill.

HILL UPDATE

Reuters Senators to grill Trump’s pick for NSA chief on Russia, privacy

WASHINGTON (Reuters) – U.S. senators will grill President Donald Trump’s pick to lead the National Security Agency on the government’s surveillance reach and a range of cyber security issues on Thursday, when he faces his second confirmation hearing to lead the electronic spy agency.

Department of Defense Military Officials Testify on Cybersecurity on Capitol Hill

WASHINGTON, March 14, 2018 — The military service chiefs of cybersecurity see an upward trend in the capacity, capabilities, sophistication and persistence of cyber threats against military networks, Navy Vice Adm. Michael M. Gilday, the commander of U.S. Fleet Cyber Command and U.S. 10th Fleet said on Capitol Hill yesterday.

ARTICLE SUMMARY

Washington Post To get rural kids online, Microsoft wants to put Internet access on school buses

Microsoft is looking to turn school buses into Internet-enabled hotspots in an experiment that’s aimed at helping students in rural Michigan do their homework. The company wants to use empty TV airwaves to beam high-speed Internet signals to buses in Hillman, Mich., as they travel to and from school, according to regulatory filings submitted Wednesday to the Federal Communications Commission. The article highlighted Microsoft’s filing to provide internet access on school busses via TV white spaces and noted Microsoft is launching other experiments in Georgia, Kansas, Maine, Virginia and Washington state.

The Verge US announces new sanctions against Russian trolls and hackers

The US Treasury Department has instituted a new set of sanctions against five entities and 19 individuals tied to Russian hacking and influence operations. The sanctions target many of the same Internet Research Agency employees charged by Special Counsel Robert Mueller in February, as well as various members of Russian intelligence. US persons and corporations are forbidden from doing business with anyone designated by the sanctions, cutting targets off from much of the world’s financial infrastructure.

Politico Morning Tech The ACLU and Amnesty International are sounding the alarm on surveillance abuses they say could result from the CLOUD Act

The bill, S. 2383 (115), would set up a legal framework for U.S. law enforcement to access data stored overseas through bilateral treaties. “This is not a small deal. This bill is a dramatic shift in the law,” said ACLU legislative counsel Neema Singh Guliani. She argued it could enable countries that have a record of human rights abuses to bypass U.S. legal safeguards to access people’s data. On the other hand, a Lawfare piece earlier this week argued the bill would actually improve civil liberties protections.

Reuters Symantec prevails again in Intellectual Ventures data storage patent case

A federal appeals court on Thursday upheld the dismissal of a patent infringement case the licensing company Intellectual Ventures brought against Symantec Corp. The Federal Circuit Court of Appeals affirmed a lower court ruling that invalidated a patent relating to data storage technology IV accused Symantec of infringing in a 2013 lawsuit.

The Economist The battle for digital supremacy

“DESIGNED by Apple in California. Assembled in China”. For the past decade the words embossed on the back of iPhones have served as shorthand for the technological bargain between the world’s two biggest economies: America supplies the brains and China the brawn.

Axios EU proposes new tax on U.S. tech companies’ revenue

The European Commission will vote next week on a proposed 3% tax on digital revenues of large tech companies such as Google, Facebook and Amazon that do significant business abroad. Digital advertising and gig economy services would be within the scope of the tax, per a draft of the proposal obtained by Reuters.

Green Bay Press Gazette Rural broadband push to add 20 jobs, fast Internet to 82,000 in Wisconsin, Michigan

A plan by Microsoft and a rural internet provider to bring broadband access to more than 80,000 people in northern Wisconsin and Michigan’s Upper Peninsula could spur jobs in the region. A recently announced agreement between the Washington-based tech giant and Packerland Broadband of Iron Mountain, Michigan, is expected to provide expanded broadband service in the two states by 2022.

The Hill EU considering new regulations on big tech: report

Major technology companies like Amazon, Facebook and Google could reportedly face new European Union rules that would force the companies to be more transparent in their search results ranking process. Reuters reports that the new rules are currently being drafted and are aimed at preventing such large companies from abusing dominant positions in the market.

CNBC Silicon Valley reeling as Trump chokes off a critical source of tech talent

Donald Trump has taken a tougher stance toward Iran in the past year, including more sanctions, a travel ban and amped-up rhetoric. Mike Pompeo, the CIA director set to be nominated as Secretary of State, is an Iran hardliner. But there’s been collateral damage from these actions: sharply reduced flow in the pipeline of Iranian talent, a hidden but crucial source of talent for the U.S. high tech industry.

CNBC White House may impose tariffs on China next for intellectual property theft

The White House is considering imposing a raft of tariffs and other punitive measures on China for alleged intellectual property theft, long a source of tension between the two countries, which are key trade partners. The Office of the U.S. Trade Representative submitted a proposal to the White House calling for tariffs on a range of Chinese products, restrictions on investment by Chinese companies in the United States, and limits on visas for certain Chinese nationals, according to the Nikkei Asian Review newspaper, citing a source familiar with international trade. The tariffs would not only target technology products that are often subject to intellectual property theft, but also goods such as clothing, according to the report.

TorrentFreak U.S. Navy Under Fire in Mass Software Piracy Lawsuit

German software company Bitmanagement is asking the US Court of Federal Claims for a partial summary judgment against the US Government. According to the software vendor, it’s undisputed that the Navy installed its software on hundreds of thousands of computers without permission, infringing its copyright.

Axios Not everyone in tech agrees about immigration

Consumer Technology Association chief Gary Shapiro said that the Trump Administration is going “in the right direction” when it comes to immigration, during a panel discussion at the South by Southwest festival in Austin. Trump immigration have not been well received by many in tech, which features large numbers of foreign-born tech employees and entrepreneurs. But Shapiro’s comments show there is not unanimity. “Who do we want here?” is the central question when it comes to immigration policy, said Shapiro.

THINK TANK/TECH TRADE ASSOCIATION HIGHLIGHTS

American Enterprise Institute (AEI)

Blog on standardized tests and STEM education: AEI Scholar Mark J. Perry reviewed a Wall Street Journal study on the myths of the ACT and SAT, concluding that “standardized tests are predictive of future success in college (including the selection of degree program) and beyond.” Perry says that this finding “would offer one possible explanation for the significant male over-representation in certain highly quantitative STEM college degree programs and careers. And if that’s the case, then no amount of federal funding, social engineering, and girls-only STEM summer camps will change what might just be a natural outcome.” (AEI BLOG – If SAT test is reliable measure of college performance, could gender differences on math SAT explain differences in STEM? By Mark J. Perry, March 15, 2018)

Americans for Prosperity

Op-ed on online sales tax: Chief Government Affairs Officer Brent Gardner argued that “a national online sales-tax system would place a burden on online retailers far beyond any with which brick-and-mortar businesses have to contend.” He urged “Congress and the Trump administration to cut taxes, control spending and eliminate regulatory barriers that get in the way of a growing economy” instead of “stifling the very economic turnaround [they have] helped create.” (THE HILL – Online sales taxes would be a dangerous expansion of state taxing power, By Brent Gardner, March 14, 2018) (Additional: AFP News)

Competitive Enterprise Institute (CEI)

Memo on internet sales tax proposals: Jessica Melugin, associate director of the Center for Technology & Innovation argued that internet sales tax proposals “would harm consumers, hurt small online businesses, and hinder the free flow of interstate commerce.” Melugin suggests “an origin-based sales tax system” which would “provide a more equitable and efficient approach to Internet sales that preserves healthy tax competition among states.” (CEI MEMO – Online Sales Taxes Make Government Bigger and Undermine Federalism, By Jessica Melugin, March 15, 2018)

Information Technology Industry Council (ITI)

Blog addressing tech infrastructure spending: Marisa Hawley, a government affairs manager at ITI, wrote that “in order to ensure American economic strength and leadership on the global stage,” the government needs to “expand broadband access nationwide, enable smart technology in infrastructure, secure infrastructure from [cybersecurity threats], and expedite the deployment of spectrum and 5G.” (ITI BLOG – Investing in Innovation to Make American Infrastructure Smarter and Stronger, By Marisa Hawley, March 15, 2018)

Information Technology and Innovation Foundation

Op-ed on EU IoT data privacy proposal: Senior policy analyst Nick Wallace advised caution over the forthcoming ePrivacy Regulation (ePR), which he wrote would “unnecessarily regulating Internet of Things (IoT) devices.” He argued it is “not practical” for the European Commission to regulate “machine-to-machine transmissions, which would include all the data flowing between IoT devices.” (EU OBSERVER – EU e-privacy proposal risks breaking ‘Internet of Things’, By Nick Wallace, March 8, 2018)

New America

Multiple materials on the CLOUD Act

o Just Security post: Robyn Greene, policy counsel and government affairs lead for the Open Technology Institute (OTI), published an article in Just Security arguing the CLOUD Act “would create an exception to the Stored Communications Act (SCA) to enable foreign countries to bypass the Mutual Legal Assistance Treaty (MLAT) process.” Greene provided four “common sense fixes” for the bill, including that “the sponsors should improve the CLOUD Act by providing for meaningful Congressional oversight.” (JUST SECURITY – Four Common Sense Fixes to the CLOUD Act that its Sponsors Should Support, March 13, 2018)

o Blog: Green also published a blog outlining the goals of the CLOUD Act and arguing that the bill “lacks necessary safeguards and would threaten the privacy and human rights of Americans and internet users around the world.” (NEW AMERICA BLOG – The CLOUD Act’s Remedy for Microsoft-Ireland Has One Glaring Omission, March 13, 2018)

NOTABLE QUOTES

“Conflicts like those demonstrated in United States v. Microsoft can leave service providers trapped – either violating a foreign law by not complying with a legal order to disclose data, or an American law designed to prevent such disclosure without proper process… The CLOUD Act clarifies the legal morass and improves civil rights reforms by demanding foreign countries needing access to data stored on American soil to adhere to a high standard of privacy and civil-rights requirements.”

– Carl Szabo, general counsel, NetChoice

“Ultimately, delaying or doing nothing are not realistic options for Congress at this point. The frustrations that law enforcement agencies are currently experiencing in trying to gain lawful access to data stored abroad are real. Other countries are already pursuing data localization requirements and are likely to accelerate their efforts should the Supreme Court rule in the government’s favor in United States vs. Microsoft. Perhaps most importantly, a ruling in the government’s favor in the case would significantly reduce the Justice Department’s incentive to negotiate, making it even more difficult to ensure strong privacy protections in a final agreement.”

– Michael Chertoff, senior counsel, Covington & Burling LLP

“The jobs of the future all have some digital aspect to them, whether you are a computer science engineer … or you want to run a small business, having digital skills is essential to your future and your opportunity.”

– Shelley McKinley, Microsoft’s general manager of technology and corporate responsibility

“If Congress is going to pass a bill that would enable countries to bypass that process, especially without any debate or opportunity for amendment, it should at least ensure that the bill incorporates certain critical safeguards for individual rights. While the proposed four changes would not address every concern that the CLOUD Act raises, they would at least help minimize the risk that the bill could not empower foreign governments to commit human rights abuses with data held by U.S. companies.”

– Robyn Greene, policy counsel, Open Technology Institute

“The CLOUD Act claims it’s trying to solve a new problem that has emerged in the digital age. In reality, however, the legislation would give governments only extremely low hurdles to access private information; no need to conform with human rights obligations, no need to pre-access independent oversight, no need to minimize use of Americans’ data. In failing to do more, the CLOUD Act would exacerbate the problems MLAT was designed to solve, and deal a blow to human rights around the world.”

– Jennifer Granick & Neema Singh Guliani, counsel, American Civil Liberties Union

“If Congress sits on the sidelines, other countries will localize data and access it under local procedures that often are less stringent than the CLOUD Act would provide. And if Congress is slow in passing the bill, and congressional dawdling allows the Supreme Court to rules against Microsoft before the bill is passed in the pending Supreme Court case, then bargaining power will shifts to the Department of Justice and against those supporting stronger privacy protections.”

– Jennifer Daskal, associate professor of law, American University & Peter Swire, professor of law, Georgia Tech

“The CLOUD Act represents a major change in the law — and a major threat to our freedoms. Congress should not try to sneak it by the American people by hiding it inside of a giant spending bill. There has not been even one minute devoted to considering amendments to this proposal.”

– Neema Singh Guliani, legislative counsel, American Civil Liberties Union

“Personalized computing devices are incredibly valuable in terms of the data they collect about us and the data they provide to us. It would be surprising if law enforcement did not want to try and leverage these flows of data to and from citizens to the extent that they can.”

– Brian Nussbaum, assistant professor, University of Albany

“It expressly prohibits any targeting of U.S. persons by foreign governments. It requires any country entering into a data-sharing agreement with the United States to provide robust privacy and civil liberties protections. And it creates an expedited procedure for Congress to block implementation of any data-sharing agreement it disapproves.”

– Spokesperson for Sen. Hatch

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